Non-Profit News Service No. 0348 - Draft ruling released about the application of GST to financial assistance payments.

On 2 November 2011, we published the draft ruling GSTR 2011/D4 Goods and services tax: financial assistance payments. The final ruling is scheduled to be issued on 30 May 2012.

The draft ruling is a rewrite of GSTR 2000/11Goods and services tax: grants of financial assistance. It explains when GST is payable in relation to a financial assistance payment.

Financial assistance payments include payments described as:

  • grants
  • subsidies
  • sponsorships
  • financial assistance or support
  • co-payments
  • rebates
  • contributions.

We understand that, based on the conclusion in example 4 of GSTR 2000/11, some payers have treated financial assistance payments as consideration for a taxable supply on the basis that there is a repayment clause in an agreement.

The draft ruling clarifies that a financial assistance payment is not made for the payee agreeing to repay the money. Instead the payee needs to make a supply of something else for that payment for there to be a taxable supply.

The draft ruling also reflects the decision of the Full Federal Court in Commissioner of Taxation v. Secretary to the Department of Transport (Vic) [2010] FCAFC 84; 2010 ATC 20-196; 76 ATR 306 (Department of Transport) concerning GST on taxi subsidies for people with a disability.

The draft ruling makes it clearer when a financial assistance payment is consideration for a taxable supply. It also includes references to other relevant public rulings issued after 2000 - for example, GSTR 2006/9Goods and services tax: supplies.

Proposed transitional arrangement

You can continue to rely on the views expressed in GSTR 2000/11 for payments made before 31 December 2012 if both of the following apply:

  • the arrangement between the parties was entered into before the date of issue of the final ruling
  • the GST consequences of the treatment of financial assistance payments made under those arrangements are impacted by any conflict between the views expressed in the final ruling and GSTR 2000/11.

Where you have entered into arrangements that you can not alter to take into account a change in GST treatment as a result of the views expressed in the final ruling, you should apply to the ATO, in writing, for us to consider your circumstances on a case-by-case basis.

Effect of the final ruling

Where you have relied on GSTR 2000/11 to treat a supply as a taxable supply and the supply is not a taxable supply under the views expressed in the final ruling, you may seek a refund for past overpaid GST if it is within relevant time limits and the payer is first refunded the overpaid amount.

Where you have relied on GSTR 2000/11 to work out that you did not make a taxable supply and the supply is a taxable supply under the views expressed in the final ruling, then no GST is payable on that supply. This means the amount of input tax credit the recipient is entitled to is zero.


You are invited to provide comments on the draft ruling and the proposed transitional arrangement by 16 December 2011 to Warren Stamoulis:

Phone:(08) 8218 9286

Fax:(08) 8208 1898


Australian Taxation Office
PO Box 9977

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    Last modified: 18 Nov 2011QC 25118